Congress Considers Extending Loan Relief
Congress is considering legislation that would include rural businesses and communities initially left out of the Coronavirus Aid, Relief and Economic Security (CARES) Act stimulus package.
The Rural Equal Aid (REA) Act, a bipartisan measure led by Rep. Cindy Axne, D-Iowa, and Sen. Jon Tester, D-Montana, will provide relief to entities with loans through the USDA Rural Development program. Currently, only businesses with loans through the Small Business Administration are eligible to have the principal, interest, and any associated fees owed on the covered loans for a six-month period.
Under the new proposal, payment relief would extend to businesses with loans through the Rural Microentrepreneur Assistance Program (RMAP) and the Intermediary Relending Program, as well as loans made to public and nonprofit organizations for community facilities, and to businesses, cooperatives, and nonprofits expanding in rural areas.
“Expanding support to rural businesses will provide parity for rural communities that have been hit hard by the economic impacts of the coronavirus pandemic,” said Johnathan Hladik, policy director for the Center for Rural Affairs. “These are the loans that keep Main Street vibrant, making it possible for small community financial institutions to grow local economies with local dollars.”
What’s in the bill?
The Rural Equal Aid Act would make six months of payments for rural small businesses and nonprofits using four USDA loan programs:
- Community Facilities loans, which are loans made to public and nonprofit organizations for essential community facilities like hospitals, libraries, child care and community centers, and public facilities like fire stations or town halls.
- Business and Industry loans made to small businesses, cooperatives, and nonprofits to develop and expand businesses in rural areas.
Two loan programs made through small local intermediaries. The borrowers from these programs are often unable to access other credit, and may have been unable to use the Paycheck Protection Program because they don’t have existing banking relationships.
- The Intermediary Relending Program, which provides loans of no more than $250,000 made to borrowers who are unable to get credit elsewhere, but need capital to get started or expand their business. These loans average less than $100,000 and support small local businesses.
- The Rural Microentrepreneur Assistance Program (RMAP), which offers loans of no more than $50,000 through local nonprofits. These loans are available to businesses with no more than 10 employees, making them a frequent choice for entrepreneurs looking for capital to start up a new business. In addition, RMAP loans are frequently used by women entrepreneurs.
Who is co-sponsoring the legislation?
Cosponsors of the House bill include Reps. Lisa Blunt Rochester, D-Delaware; Jared Golden, D-Maine; Troy Balderson, R-Ohio; Austin Scott, R-Georgia, and Scott Tipton, R-Colorado.
Cosponsors of the Senate bill include Sens. Angus King, I-Maine; Mitt Romney, R-Utah; Jeanne Shaheen, D-New Hampshire; Chris Coons, D-Delaware, and David Perdue, R-Georgia, are leading the companion bill in the Senate.
“Our rural businesses have been under the same burdens and weathering the same storm since the beginning of COVID-19. It is only fair that we extend them the same provisions to sustain them through challenging economic times,” Axne said. “I urge congressional leadership to include this commonsense measure in the discussions of the next round of essential COVID-19 aid.”
Source: Farm Progress